Goldman Sachs: No apologies

NEW YORK (CNNMoney.com) -- Goldman Sachs defended its controversial employee bonuses and multi-billion dollar relationship with AIG in its annual report released Wednesday, while downplaying its short-selling in the mortgage market.

Much of the letter was devoted to describing Goldman's (GS, Fortune 500) role in the financial crisis and the recession, praising its own "strong performance" in 2009, which it referred to as a "year of resiliency."

The letter, co-signed by CEO Lloyd Blankfein and President Gary Cohn, also mentioned that Goldman repaid its $10 billion debt to the government in June 2009, as a U.S. Treasury recipient of the Troubled Asset Relief Program.

The letter came after Blankfein and other Wall Street chief executives were subjected to intense scrutiny in a hearing before the Financial Crisis Inquiry Commission in January, when they were blamed for contributing to the economic crisis.

Goldman's (GS, Fortune 500) letter is peppered with the word "client," as the Wall Street firm continuously reiterated its role in serving its investors amid troubling economic times.

"Our first priority is and always has been to serve our clients' interests," read the letter, in one of its opening lines.

Referring to its staff as its "most important asset," Goldman also acknowledged the negative attention that's been given to its annual bonuses.

"We have not been blind to the attention on our industry and, in particular, on Goldman Sachs, with respect to compensation," the letter read.

The firm defended these bonuses, in part because they were lower in 2009 compared to prior years, which "reflected the extraordinary events of 2009."

Goldman also defended its business relationship with the insurer AIG (AIG, Fortune 500), in one of the most extreme cases of government bailouts. Goldman said its total AIG exposure on the securities on which it brought protection was $10 billion, bolstered by $7.5 billion in collateral and hedges.

The firm emphasized that if AIG had collapsed in the fall of 2008 without a bail-out from the government, Goldman "would have not have incurred any material economic loss."

Goldman also downplayed its reliance on short selling in the mortgage market in 2007, ahead of that market's collapse.

"The firm did not generate enormous net revenues or profits by betting against residential mortgage-related products, as some have speculated," the letter read. "Rather, our relatively early risk reduction resulted in our losing less money than we otherwise would have when the residential housing market began to deteriorate rapidly."

The firm said it "offset" its short selling with long positions, and said that its short selling was not a "bet against its clients."